Why do apartment costs keep climbing in Phoenix?
"Outstanding job growth is the key factor," said Stephanie McCleskey, Vice President of Research for Axiometrics. "With jobs being added at an annual rate above 3%, the demand for apartments is absorbing the considerable amount of new supply coming into the market."
According to Axiometrics, Phoenix employers added 58,600 jobs in the 12 months, ending in July. The data shows developers are on pace to add 7,093 new units to the market this year and another 4,612 in 2017.
The Valley cities with the most growth based on the 18 submarkets with more than 1,000 units:
- South Glendale 11.0%
- South Mesa 9.1%
- Sunnyslope 8.2%
- East Mesa 7.9%
- North Glendale/Peoria 7.3%
Even with mortgage rates at historic lows, the Phoenix apartment market remains one of the five hottest in the nation. Rental costs have increased for 23 of the past 24 months and apartment occupancy has also increased.
Nathan Pierce, principal at Strong Tower Realty in Scottsdale, suggests renters look into low or no down payment programs and take steps to homeownership.
"People are spending more on rent than they would on a mortgage payment," Pierce said. "In our market you could own the same house for approximately 25 percent less than what the rent is costing us today."
Pierce said not only are renters spending more when they sign a lease, they're losing out on tax write-offs such as interest, property tax and mortgage insurance by not owning.
"Contact a real estate professional, we'll get you with the right lender and search out every available program," he said.